The ancient "custom" of gifting a part of his merchandise by a merchant to the King while entering a kingdom came to be formalized by the modern States into Customs duty. Customs duty is imposed on the goods imported into or exported out of the country. Developing economies including India use Customs duties as an important source of revenue and also a method to regulate the flow of goods.
Customs in India
As per history of Customs House Madras, the Dana Adigaries (Treasury Officers) were exercising Customs responsibilities at the seaports around 600 AD, under the rule of Pallava King Mahendra Verma. In India, British collected Customs duties in Madras presidency through the agent of the East India Company, the Governor, from 1654 onwards.
Lord Edward Clive (1754 – 1839) during the period 1798 -1803 as Governor Madras, passed first legalized Sea Customs Regulation as Section 2 of Regulation 1 of 1802. After 1859, imported goods started being assessed according to rates fixed in the Customs Duty Act, 1859. Powers under the Land Customs Act, 1924 were exercised by the Governor General in Council and later by the Central Board of Revenue known as C.B.R, constituted in 1924 for centralizing the Customs Administration under direct control of the Government of India. In India, the Customs Tariff was incorporated as Schedules to the Indian Tariff Act, 1934.
On 13 December, 1962, Customs Act was incorporated to consolidate and amend the law relating to Customs. The Customs Tariff Act, 1975, with the above Schedules, came into effect on 2nd August, 1976. The Import Schedule was based on the Customs Co-operation Council Nomenclature, which was also known as "Brussels Tariff Nomenclature" (BTN). Further, with effect from 28th February, 1986, the above Tariff was revised based on the Harmonised System of Nomenclature (HSN) adopted by the World Customs Organisation (WCO). Since then, many acts have been incorporated time to time, the latest being the Goods & Services Tax, 2017 which subsumes all federal & state Indirect Taxes into an Integrated Goods & Services Tax.